London may fail to house its burgeoning population by 2021 unless the current
construction rate doubles to 50,000 new homes a year.

The equivalent of 18 new Olympic Villages is needed to address a growing housing crisis that could wipe London off the map as an international business hub, according to a new study from the real estate adviser Savills.

“Unless we are careful the shortage of homes will start to impact on London’s ability to compete,” said Susan Emmett, director at Savills. “We will start to see businesses think twice about coming to a city where they cannot afford to house their employees.”

The Capital’s population - which stands at around 8.2m - last peaked at 8.9m in the 1930s, at which point around 60,000 homes were being built a year. However, London’s current residential construction pipeline equates to an average of just 28,500 new homes a year, suggesting an annual shortfall of 21,500.

Enormous waiting lists for council houses, young professionals unable to move out of their parents’ home and more bedrooms being squeezed into rented accommodation are all signs of housing crisis, according to Savills.

The Royal Bank of Scotland and Halifax have reported a strong uptake in the Government’s Help to Buy scheme - having received a total of 2,384 applications potentially worth £365m in mortgages. This will unlock the housing market for first time buyers by providing security on 95pc loans.

This, combined with a lack of supply, and London’s new status as the best city for skilled jobs, could further fuel a housing crisis at a time when the UK economy is looking to encourage more overseas businesses to set up on British shores. Commentators also believe a lack of supply could lead to a housing bubble.

Research from RICS (the Royal Institute of Chartered Surveyors) revealed that house prices jumped once again last month as rocketing interest from would-be buyers dwarfed the amount of properties coming onto the market.

The housebuilder Redrow has reported a 52pc rise in private reservations in the financial year to date. At the firm’s Annual General Meeting on Monday, Redrow chairman Steve Morgan said private reservations now stand at 1,400 homes, with Help to Buy reservations representing 35pc of total private sales over the period.